Woh Che Co. has four departments: materials, personnel, manufacturing, and packa
ID: 2779742 • Letter: W
Question
Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.
Departmental data for the company’s recent reporting period follow.
1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.
Indirect Expense Cost Allocation Base Supervision $ 82,800 Number of employees Utilities 53,000 Square feet occupied Insurance 24,000 Value of assets in use Total $ 159,800Explanation / Answer
1. Allocate each of the three indirect expenses across the four departments.
Supervision expenses
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Number of employees
Numerator
Denominator
% of Total
Materials
28
28
140
20
20%* $82,800
$16,560
Personnel
7
7
140
5
5%* $82,800
$4,140
Manufacturing
63
63
140
45
45%* $82,800
$37,260
Packaging
42
42
140
30
30%* $82,800
$24,840
Totals
140
140
140
100
100%* $82,800
$82,800
Utilities
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Square feet occupied
Numerator
Denominator
% of Total
Materials
39,000
39,000
130,000
30
30%* $53,000
$15,900
Personnel
6,500
6,500
130,000
5
5%* $53,000
$2,650
Manufacturing
65,000
65,000
130,000
50
50%* $53,000
$26,500
Packaging
19,500
19,500
130,000
15
15%* $53,000
$7,950
Totals
130,000
130,000
130,000
100
100%* $53,000
$53,000
Insurance
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Value of assets in use
Numerator
Denominator
% of Total
Materials
12,600
12,600
63,000
20
20%* $24,000
$4,800
Personnel
3,150
3,150
63,000
5
5%* $24,000
$1,200
Manufacturing
31,500
31,500
63,000
50
50%* $24,000
$12,000
Packaging
15,750
15,750
63,000
25
25%* $24,000
$6,000
Totals
63,000
63,000
63,000
100
100%* $24,000
$24,000
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.
Supervision
Utilities
Insurance
Total
Materials
$16,560
$15,900
$4,800
$37,260
Personnel
$4,140
$2,650
$1,200
$7,990
Manufacturing
$37,260
$26,500
$12,000
$75,760
Packaging
$24,840
$7,950
$6,000
$38,7900
Totals
$82,800
$53,000
$24,000
$159,800
Supervision expenses
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Number of employees
Numerator
Denominator
% of Total
Materials
28
28
140
20
20%* $82,800
$16,560
Personnel
7
7
140
5
5%* $82,800
$4,140
Manufacturing
63
63
140
45
45%* $82,800
$37,260
Packaging
42
42
140
30
30%* $82,800
$24,840
Totals
140
140
140
100
100%* $82,800
$82,800
Utilities
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Square feet occupied
Numerator
Denominator
% of Total
Materials
39,000
39,000
130,000
30
30%* $53,000
$15,900
Personnel
6,500
6,500
130,000
5
5%* $53,000
$2,650
Manufacturing
65,000
65,000
130,000
50
50%* $53,000
$26,500
Packaging
19,500
19,500
130,000
15
15%* $53,000
$7,950
Totals
130,000
130,000
130,000
100
100%* $53,000
$53,000
Insurance
Allocation Base
Percent of Allocation Base
Cost to be Allocated
Allocated Cost
Department
Value of assets in use
Numerator
Denominator
% of Total
Materials
12,600
12,600
63,000
20
20%* $24,000
$4,800
Personnel
3,150
3,150
63,000
5
5%* $24,000
$1,200
Manufacturing
31,500
31,500
63,000
50
50%* $24,000
$12,000
Packaging
15,750
15,750
63,000
25
25%* $24,000
$6,000
Totals
63,000
63,000
63,000
100
100%* $24,000
$24,000
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